business plan

1. Forecasting The
Revenues Of The
Business
Module 7 – Lesson 1

2. Making informed
estimates

3. What is it
› Making informed estimates requires careful considerations
on several factors that might affect the outcome of your
travel such as distance from home to school, the means of
transportation you will be taking, the number of passengers
and etc.
› Traveling from home to school on a regular basis had
helped you arrive with an estimate that was very close to
the actual time of arrival.
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4. What is it
› Considering these factors is essential in making informed
estimates by the entrepreneur.
› Since the business he/she is venturing hasn’t started yet, it
is important that these factors affecting forecasting will be
determined to better help him/her in making the best
decisions for the business.
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5. What is it
› Revenue is a result when sales exceed the cost to
produce goods or render the services. Revenue is
recognized when earned, whether paid in cash or charged
to the account of the customer.
› Other terms related to revenue include Sales and Service
Income.
› Sales is used especially when the nature of business is
merchandising or retailing, while
› Service Income is used to record revenues earned by
rendering services.
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6. What is it
› Ensuring credible and accurate forecasting is crucial for
entrepreneurs to avoid future complications in their small
business.
› When estimating potential revenue, it is essential to
consider both external and internal factors that can impact
the business.
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7. factors to consider in
forecasting revenues

8. Factor 1
› The economic condition of the country. When the
economy grows, its growth is experienced by the
consumers. Consumers are more likely to buy products
and services.
› The entrepreneur must be able to identify the overall health
of the economy in order to make informed estimates. A
healthy economy makes good business
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9. Factor 2
› The competing businesses or competitors. Observe
how your competitors are doing business. Since you share
the same market with them, information about the number
of products sold daily or the number of items they are
carrying will give you idea as to how much your
competitors are selling.
› This will give you a benchmark on how much products you
need to stock your business in order to cope with the
customer demand. This will also give you a better estimate
as to how much market share is available for you to exploit.
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10. Factor 3
› Changes happening in the community. Changes
happening in the environment such as customer
demographic, lifestyle and buying behavior give the
entrepreneur a better perspective about the market.
› The entrepreneur should always be keen in adapting to
these changes in order to sustain the business. For
example, teens usually follow popular celebrities especially
in their fashion trend. Being able to anticipate these
changes allows the entrepreneur to maximize sales
potential.
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11. Factor 4
› The internal aspect of the business. Another factor that
affects forecasting revenues in the business itself. Plant
capacity often plays a very important role in forecasting.
For example, a “Puto” maker can only make 250 pieces of
puto every day; therefore, he can only sell as much as 250
pieces of puto every day.
› The number of products manufactured and made depends
on the capacity of the plant, availability of raw materials
and labour and also the number of salespersons determine
the amount of revenues earned by an entrepreneur.
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12. Calculating and
projecting potential
revenues

13. The table below shows an example of revenues
forecasted in a Ready to Wear Online Selling
Business.
› Ms. Fashion Nista recently opened her dream business
and named it Fit Mo’to Ready to Wear Online Selling
Business, an online selling business which specializes in
ready to wear clothes for teens and young adults.
› Based on her initial interview among several online selling
businesses, the average number of t-shirts sold every day
is 10 and the average pair of fashion jeans sold every day
is 6. From the information gathered, Ms. Nista projected
the revenue of her Fit Mo’to Ready to Wear Online Selling
Business.
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14. The table below shows an example of revenues
forecasted in a Ready to Wear Online Selling
Business.
› She gets her supplies at a local RTW dealer in the city. The
cost per piece of t-shirt is 90 pesos, while a pair of fashion
jeans costs 230 pesos per piece. She then adds a 50
percent mark up to every piece of RTW sold.
› Mark up refers to the amount added to the cost to come up
with the selling price.
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15. The formula for getting the mark up price is as
follows:
› Mark Up Price = ( Cost x Desired Mark Up Percentage)
› Mark Up for T-shirt = ( 90.00 x .50)
› Mark Up for T-shirt = 45.00
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16. In calculating for the selling price, the formula
is as follows:
› Selling Price = Cost + Mark Up
› Selling Price = 90.00 + 45.00
› Selling Price for T-shirt = 135.00
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17. Table 1 displays the daily projected revenue for Ms.
Nista's online selling business, with computations
represented by uppercase letters A, B, C, D, and E.

18. Monthly revenue is calculated by multiplying the daily
revenues by 30 days (1 month).
› For example, in Table 1 the daily revenue is 3,420.00. To
get the monthly projected revenue it is multiplied by 30
days. Therefore,
› Projected Monthly Revenue = Projected Daily Revenue x
30 days
› Projected Monthly Revenue = 3,420.00 x 30
› Projected Monthly Revenue = 102,600.00

19. The projected yearly revenue is computed by
multiplying the monthly revenue by 12 months.
› Projected Yearly Revenue = Projected Daily Revenue x
365 days
› Projected Yearly Revenue = 3,420.00 x 365
› Projected Yearly Revenue = 1,248,300.00

20. Table 2 presents the projected monthly and yearly
revenue for Ms. Nista's online selling business.

21. Table 3 shows the projected monthly revenues
covering one year of operation.
› The table shows an average increase of revenue every
month by 5 percent except June, July to October and
December.
› While the month of June has twice the increase from the
previous month by 10 percent, let us consider that months
covering July to October are considered to be Off-Peak
months, therefore sales from July to October are expected
to decrease.

22. › It is assumed that there is no increase in revenue from July
to August, while from August to October the decrease in
revenues is 5 percent from previous month.
› Since revenues from sales of RTW’s are considered to be
seasonal, it assumed that there is a 10 percent increase in
revenue from November to December.

23. Computation for assumed increase of
reveneue on specific months is as follows:
› Projected Monthly Revenue (Increase) = Revenue
(January) x 5 % Increase
› Projected Monthly Revenue (Increase) = 102,600.00 x .05
› Projected Monthly Revenue (Increase) = 5,130.00
› Projected Revenue for February = Revenue (January) +
Amount of Increase
› Projected Revenue for February = 102,600.00 + 5,130.00
› Projected Revenue for February = 107,730.00

24. On the other hand, decrease in revenue is
computed as follows:
› Projected Monthly Revenue (Decrease) = Revenue
(August) x 5 % Increase
› Projected Monthly Revenue (Increase) = 144,041.14 x .05
› Projected Monthly Revenue (Increase) = 7,202.06
› Projected Revenue for September = Revenue (August) -
Amount of Decrease
› Projected Revenue for September = 144,041.14 –
7,202.06
› Projected Revenue for September = 136,839.08

25. Important Assumptions:
February to May Increase of 5% from previous
revenue
June Increase of 10% from previous revenue
July to August The same Revenue
September to October Loss of 5% from previous
revenue
November Increase of 5% from previous revenue
December Increase of 10% from previous revenue

26. A reminder:
› While the numbers in the last table may be appealing, it's
important for entrepreneurs not to be overwhelmed.
› These figures represent gross revenue and do not reflect
the final profit or income. Remember, net revenue is
influenced by the expenses incurred during business
operations.

27. THE END
Members:
Dumago
Abellar
Morales
Madroño
Romualdez, Catherine
Zamuco
Almar
Regidor
Macarandan